EUR/USD - Euro Weakens As PMIs Disappoint

EUR/USD has lost ground in Thursday trading. In the European session, the pair is trading slightly below the 1.37 line. It's a busy day in both the eurozone and the US. There wasn’t much to cheer about in the eurozone, as PMIs were mostly weak, and German and French inflation indicators both posted declines. In the US, there are three key releases later today – Core CPI, Unemployment Claims and the Philly Fed Manufacturing Index.

Eurozone PMIs were mostly weak in January. French Service and Manufacturing PMIs continue to point to contraction, while the eurozone numbers fell short of their estimates. German numbers were mixed, as Manufacturing PMI was well short of the estimate, while Services PMI managed to beat the forecast. These weak figures from the eurozone's two largest economies do not bode well for the eurozone and the euro responded with modest losses

It hasn’t been a very good week for US releases up till now. Building Permits dipped to 0.94 million, its lowest level in five months. The indicator fell short of the estimate of 0.98 million. The Producer Price Index dropped to 0.2%, down from 0.4% a month earlier. Although the index did match the forecast, we continue to see weak inflation numbers, indicative of an underperforming economy. On Tuesday, the culprit was the Empire State Manufacturing Index. The important manufacturing indicator slid to 4.5 points in January, down sharply from 12.5 a month earlier. Meanwhile, the hiccups continue on the employment front, as Unemployment Claims were higher than expected last week. If the markets don’t see some solid numbers on Thursday, the euro could gain more ground.

According to the Federal Reserve minutes, we’re unlikely to see interest rates go up if unemployment drops to 6.5%. Previously, the Fed had said they would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Fed policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. The minutes also show that the Fed will likely continue trimming QE, barring any downturns in the economy.

EUR/USD for Thursday, February 20, 2014

EUR/USD February 20 at 12:35 GMT

EUR/USD 1.3702 H: 1.3763 L: 1.3646

EUR/USD Technical

S3

S2

S1

R1

R2

R3

1.3410

1.3585

1.3649

1.3786

1.3893

1.4000

EUR/USD has posted losses in Thursday trading.

1.3649 continues in a support role. The next support line is at 1.3585.

1.3786 is the next line of resistance. Next, there is resistance at 1.3893.

Current range: 1.3649 to 1.3786

Further levels in both directions:

Below: 1.3649, 1.3585, 1.3410, 1.3347 and 1.3255

Above: 1.3786, 1.3893, 1.4000 and 1.4149.

OANDA's Open Positions Ratio

EUR/USD ratio has reversed positions on Thursday, pointing to gains in long positions. This is not consistent with the pair's current movement, as the euro has lost ground. Short positions have a strong majority, indicative of trader bias towards the dollar moving higher against the euro.

The euro has posted losses following weak PMI numbers out of the Eurozone. We could see some further movement in the North American session, as the US releases Unemployment Claims and other key releases later in the day.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.